South Korean Financial Regulators Request Gopax to Undergo Risk Assessment

On April 24th, it was reported that the South Korean financial regulatory authorities have requested the South Korean exchange Gopax to conduct a risk assessment again after 9 months. At present, the financial authorities are reviewing the Virtual Asset Operator (VASP) change report submitted by Coin An during its acquisition of Gopax, and the review results are expected to be postponed until mid May. Meanwhile, the delay in reviewing the change report will further delay the repayment of funds to users who bind funds in GoFi (Gopax’s cryptocurrency deposit service). Because only after the change is completed can Coin An fully pay the cost of acquiring Gopax and return the customer funds bound to GoFi of 56.6 billion won (approximately $42.39 million). （Edaily）

South Korean financial department requires Gopax to conduct another risk assessment

On April 24th, media outlets reported that the South Korean financial regulators, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), have requested Gopax to conduct a risk assessment again after 9 months. The assessment is expected to take place due to a change in ownership of the exchange, and the regulatory bodies require an evaluation of its risks for licensing purposes. Meanwhile, Gopax’s users, who have bound their funds in GoFi, are set to face delays in fund repayments, due to postponed review results that were expected by mid-May.

Background

Gopax is a crypto exchange in South Korea, which Coin An acquired in 2020. Coin An is a Coinone subsidiary that made headlines last year for acquiring a 100% stake in Gopax. As the FSS deemed Coin An’s acquisition of Gopax a significant event, financial authorities reviewed its Virtual Asset Service Provider (VASP) change report. However, they found that the report’s content needed revisions, so Coin An resubmitted it.

Risk Assessment

The risk assessment that Gopax has to undergo is part of the regulatory process that South Korean VASPs need to complete before they can receive a license. Gopax’s new ownership under Coin An has triggered the requirement for a new evaluation, according to regulatory guidelines. Moreover, the regulatory authorities are likely to scrutinize the exchange regarding its risk management policies, capital adequacy, and cybersecurity. The aim is to ensure the safety of users’ funds and prevent money laundering.

Delays in Repayment

As Gopax waits for the regulatory authorities’ approval through the risk assessment, the repayment of users’ funds that have been bound in GoFi is subjected to further delays. The acquisition of Gopax by Coin An is incomplete, causing the delay in repaying customers’ funds of approximately KRW 56.6 billion (equivalent to $42.39 million). The funds belong to those who have given cryptocurrency deposits through GoFi. Only after the regulatory review and the acquisition are completed can Coin An repay GoFi clients fully.

Conclusion

This situation highlights the importance of regulatory compliance in the crypto industry. It also emphasizes the need for VASPs to follow established guidelines to operate smoothly and protect their users’ assets. Gopax and Coin An’s case are crucial in setting an example for other South Korean exchanges seeking to gain regulatory recognition. The outcome will determine Coin An’s standing in the South Korean crypto space and its reputation among users.

FAQs:

1. What is a VASP?
A Virtual Asset Service Provider (VASP) is any entity that provides services to enable users to transfer, hold and trade digital assets.
2. How important is regulatory compliance for crypto exchanges?
Regulatory compliance is crucial for crypto exchanges to gain legitimacy and protect their users’ assets. Noncompliance could lead to reputational damage and legal or financial consequences.
3. What happens to funds bound in GoFi?
Due to the regulatory review delay, funds bound in GoFi are facing further delays in repayment until Coin An acquires Gopax, enabling the exchange to fully repay GoFi clients.